At first glance, it may not seem like much that the subsidiary created by Telefónica to get involved in the digital transformation of companies contributes 4.6% of its total turnover in 2023: 1,878 million euros compared to 40,652 million, recognizing that both figures are maximums. historical. But it is not little: another way of looking at it would highlight that, while the parent company has grown 1.6%, Telefónica Tech has grown 26.7% organically, in a year without undertaking new acquisitions.
This comparison illustrates an issue that will have a place at the Mobile World Congress starting tomorrow: having already eclipsed the predictions that the cloud giants would end up sneaking into the natural business of telecoms, will they be able to capture relevant market shares? of information technologies? Will they know how to sell added value with which to improve their margins and expand their space in the market?
It is a fact that the large telecommunications operators, especially the European ones, greatly damaged by a regulation that has protected the deterioration of prices, are clear that salvation lies in part on their abilities to get involved in the digitalization of companies and administrations. . Its original job, connectivity, will be maintained, but as a low-margin, high-risk business, with tiny or no profits, if not losses.
In contrast, the B2B (business-to-business) formula provides them with a smaller fraction of their income, but with more lucid margins. They compete – and this usually involves partnering in certain operations and services – with IT companies that the market knows as integrators. Or, increasingly, with the giants of the cloud market, which do not support the weight of legacy structures nor pay tolls for exploiting the radio spectrum. And, by the way, these companies enjoy the favor that the capital markets give to telecom companies.
This is the framework. In Europe, the operator that has most stubbornly followed this path is the German Deutsche Telekom, owner of T-Systems – strong in Spain and very strong in Catalonia, by the way – and to a lesser extent Orange and Vodafone do so, although without domicile. in Spain ad hoc subsidiaries. BT, a former British monopoly, has also played that card, with debatable results. The case of Telefónica is peculiar: it chose (belatedly?) at the end of 2019 to unify its digitalization services under a single brand, grouping assets from its possessions, including Eleven Paths (cybersecurity) and Acens (cloud for SMEs). Soon after, the new subsidiary would expand its perimeter by acquiring companies with a vocation for growth.
José Cerdán, a renowned entrepreneur who joined the Telefónica group after selling his company Acens, was appointed head of Telefónica Tech. “In life you have to know how and who to associate with to grow or you can stay in your market niche, where you can live very well, I won't say otherwise,” he reflects on his career.
Cerdán defines Telefónica Tech (colloquially Tech) as “a new generation services integration company, which has no legacy nor is it entertained by this issue that hinders so many IT companies.” It employs around 6,000 people enrolled in four activities with two organic divisions: cloud cybersecurity (86% of turnover) and big data IoT (13%). Last year it modified its structure to reorganize itself based on geographical criteria: María Jesús Almanzor is in charge of Spain and the Americas, while Gonzalo Martín Villa is responsible for the rest of Europe.
After starting in 2020, acquisitions have been an instrument of inorganic growth for Tech: in three years it has bought seven companies (two in Spain, two in the United Kingdom and one in Germany), none in 2023. This stoppage can be associated with its step back in the search for institutional investors as traveling companions. “At this moment there are no talks in sight,” Cerdán told La Vanguardia. He adds: “We primarily target multinationals and corporations. Recently we have started with medium-sized companies selling them value-added services,” he summarizes. In addition to being CEO of Tech, Cerdán is responsible for the group's global B2B activity. “We draw on Telefónica's commercial capabilities, a sales machine, to expand our client portfolio.”
Tech has an operational presence in Spain, the United Kingdom, Germany, Austria, Switzerland and Denmark, in the United States, Brazil, Peru, Colombia, Chile and Mexico; In addition, it has the capacity to reach more than five million Telefónica customers in the world.
Tech – he says – is capable of serving “cloud instances anywhere in the world. For example, a retail chain with 15,000 stores that we serve globally with a powerful hook: to work in the cloud you need a strong security component; That is where we are strong to guarantee the client their end-to-end digitalization.”
